Sterling Infrastructure, Inc. (STRL): what the price requires
At today's price, Sterling Infrastructure, Inc. (STRL) is priced for today's economics sustained for ~28.9 years. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.
Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/STRL
Headline
| Field | Value |
|---|---|
| Ticker | STRL |
| Company | Sterling Infrastructure, Inc. |
| Sector / Industry | Industrials |
| Current price | $659.13/sh |
| Composition | E-Infrastructure Solutions 59% / Transportation Solutions 26% / Building Solutions 15% |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | segment |
| Must persist for | 28.9y |
Solve inputs: computed at a 12.3% cost of capital; growth searched up to the 25% self-funding ceiling; each 1pp moves the implied horizon ~3.7 years.
Reconcile: at the x-ray's 9.3% required return this reads ~19 years; the models below use their own rates.
How unusual the bet is: high
| Reference | Value |
|---|---|
| cohort percentile (of 225 peers) | 100 |
| sustained it ~10 years at this level | 14% |
| implied end-window share | 0% |
Valuation X-Ray
Asset, earnings-power and peer-multiple models all land far below the price; ONLY the growth-DCF reaches it. The bet is durable compounding the static frames structurally cannot price (a moat/durability premium).
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 5.46x | 5 | expensive |
| Earnings | 4.38x | 5 | expensive |
| Relative | 1.73x | 5 | expensive |
| Growth | 1.02x | 3 | expensive |
Families that justify the price: Growth Families that call it expensive: Asset, Earnings, Relative
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 9.2%); the inversion above states its own rate.
Per-Model Detail (n=18)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $511.12 | 1.29x | yes | FCF base $0.5B, growth 25% (input: historical growth), terminal g 4.0%, WACC 9.2%, 7yr projection |
| DCF Exit Multiple | Growth | $647.03 | 1.02x | yes | Exit EV/EBITDA: 33.5x / 35.5x / 37.5x (bear / base = today's held flat / bull), 7yr |
| Relative Valuation | Relative | $381.07 | 1.73x | yes | P/E 30.31x (blended: static sector reference 18x + trailing (TTM) 59x), scenarios: 24.2x / 30.3x / 36.4x (bear / base = reference held flat / bull), EV/EBITDA 19.06x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | $120.74 | 5.46x | yes | BV/sh $38.33, ROE (TTM) 29.1%, ke 9.3% |
| Two-Stage Excess Return | Asset | $220.03 | 3.00x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $807.55 | 0.82x | yes | Rev $2.9B, growth 30% (input: historical growth; tapered), Terminal P/S: 5.7x / 7.1x / 8.5x (bear / base = today's held flat / bull, cap 12x) |
| Peter Lynch Fair Value | Relative | $391.65 | 1.68x | yes | EPS $11.19, growth 35% (input: historical EPS growth), PEG=1.69 (Overvalued) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $63.40 | 10.40x | yes | Normalized EBIT (5y avg op income, one-time charges added back) $0.25B × (1−21%) / WACC 9.2% → EPV (no growth) |
| Residual Income | Asset | $183.27 | 3.60x | yes | BV $38.33 + 5yr PV of (ROE (TTM) 29.1% − Kₑ 9.3%) × BV; BV grows 8.8%/yr |
| Graham Number | Asset | $98.23 | 6.71x | yes | √(22.5 × EPS $11.19 × BVPS $38.33) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | $226.16 | 2.91x | yes | EBITDA $0.57B × sector EV/EBITDA 12.0x |
| FCF Yield | Earnings | $159.30 | 4.14x | yes | FCF $441.7M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | $150.59 | 4.38x | yes | SBC-adj FCF $0.42B (FCF $0.44B − SBC $0.02B) capitalized at Kₑ |
| Ben Graham Formula | Earnings | $361.06 | 1.83x | yes | EPS $11.19 × (8.5 + 2×15.0%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | $44.65 | 14.76x | yes | BV $38.33 × (ROIC 10.7% / WACC 9.2%) |
| P/Sales Sector | Relative | $232.36 | 2.84x | yes | Revenue $2.88B × sector P/S 2.5x |
| PEG Fair Value | Relative | $419.63 | 1.57x | yes | EPS $11.19 × (PEG 1.5 × growth 25.0% (input: historical EPS growth)) → PE 37.5x |
| Earnings Yield | Earnings | $120.97 | 5.45x | yes | EPS $11.19 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Net cash | $224.1m |
| Net debt / NOPAT (after-tax) | -0.67x (net cash) |
| Net debt / operating income (pre-tax) | -0.53x (net cash) |
| Share count CAGR (dilution) | 0.8% |
| Burning cash | no |
Interest expense is not separately reported in the latest filings, so interest coverage cannot be computed.
Bullet Takeaways
- Sterling Infrastructure has rebuilt itself around AI-era construction: its 10-K notes low-bid heavy highway work "was approximately 79% of our total revenue, but we have progressively lowered this to 9% as of December 31, 2025", replaced by data-center site development where mission-critical projects are over 90 percent of E-Infrastructure backlog.
- The stock trades at roughly 61x trailing GAAP earnings at $682.13 (July 10, 2026), and every valuation frame except the cash-flow one reads the price as multiples of its central estimate, so the price only works if the data-center building boom keeps compounding for years.
- Combined backlog of $5.15 billion (up 131 percent) and raised full-year guidance of $18.40 to $19.05 in adjusted EPS are the numbers to track quarter by quarter; any backlog stall would hit a multiple this stretched hard.
Bull Case
Here is the number that does not fit the mental model of a dirt-and-concrete contractor: Sterling earns a 29 percent return on equity and converted roughly $442 million of trailing free cash flow from $2.9 billion of revenue, margins and capital efficiency that look more like an industrial technology firm than a sitework company. Construction is supposed to be low-margin, working-capital hungry, and cyclical. Sterling's version is not, because the company spent a decade deliberately exiting the worst part of the industry; the 10-K traces low-bid heavy highway work from "approximately 79% of our total revenue" down to 9 percent by the end of 2025, replaced with negotiated, mission-critical site development where execution speed, not price, wins the job.
The demand side of that repositioning is the AI capex cycle, and Sterling caught it early. The filing describes the E-Infrastructure business as "driven by our customers' investments in the development of data centers, advanced manufacturing centers, e-commerce distribution centers and warehouses" with "significant growth opportunities tied to the implementation of multi-year capital deployment plans by data center" operators. The first quarter of 2026 showed what that looks like in motion: revenue up 92 percent to $825.7 million, diluted EPS up 141 percent to $3.09, E-Infrastructure signed backlog up 123 percent (74 percent excluding the CEC acquisition), and mission-critical projects above 90 percent of that backlog. Management raised full-year guidance to $3.7 to $3.8 billion of revenue and $18.40 to $19.05 of adjusted EPS, and pointed to a total addressable pool of work approaching $6.5 billion, up about $2 billion in a single quarter.
What makes the bet durable rather than a one-cycle windfall is position and balance sheet. Site development is the first trade on every data-center project, which gives Sterling visibility into multi-phase campus buildouts years before they finish, and the CEC deal added electrical services with an earnout "contingent upon achieving certain operating income targets", aligning the sellers with the ramp. The balance sheet carries more cash than debt ($512 million of liquid assets against $288 million of gross debt), so the growth is self-funded. The bear will say a 61x trailing multiple prices all of this already; the bull's answer is that trailing numbers trail badly when revenue grows 92 percent, and the signed, contracted backlog is the part of the future that is not speculative.
Bear Case
The structural truth a holder at $682.13 has to face is that the multiples are pricing what has not happened yet. At roughly 61x trailing GAAP earnings against an 18x sector median, with the book-return, earnings-power, and peer-multiple frames all reading the price at 1.8 to 5.7 times their central estimates, today's price assumes years of compounding that exist so far only in backlog and guidance. The engine's own decomposition of the price makes the point sharply: the priced-in premium sits on assumptions of operating growth held at the fastest self-fundable pace for something like three decades, and historically only about 14 percent of comparable fast-growers sustained that kind of pace even ten years. Sterling is executing superbly. The price requires that it keep executing superbly for longer than almost anyone ever has.
The business under the multiple remains construction, with construction's risks. The 10-K is candid that backlog "may not be indicative of the revenue we expect to earn in the following fiscal year and should not be viewed or relied upon as a stand-alone indicator", and that the company carries claims for "customer-caused delays, errors in specifications and designs, contract terminations or other causes of unanticipated additional costs" that may or may not be recovered. Concentration cuts the same way: the boom customers are a handful of hyperscalers and semiconductor builders whose capital plans, however large today, are discretionary and have historically moved in lurches. A pause in data-center groundbreaking, whether from AI monetization disappointment, power constraints, or simple digestion, transmits to Sterling's E-Infrastructure segment with almost no lag, because site development is the first spend to stop.
The cyclical texture of the other segments adds a quieter drag. Building Solutions is concentrated in Texas residential markets (Dallas-Fort Worth and Houston per the filing), which are rate-sensitive and currently soft, and Transportation Solutions depends on public funding cycles. Even the balance-sheet virtue has a flip side: the share count has crept up about 0.8 percent a year, so equity holders are not being concentrated the way buyback-driven compounders concentrate them. None of this requires anything to go wrong for the bear to work. At 36x even the midpoint of management's freshly raised adjusted-EPS guidance, the multiple leaves no room for an ordinary construction disappointment: one canceled campus, one margin miss on a fixed-price job, one quarter of backlog flat instead of up, and the re-rating does the damage the fundamentals never did.
Valuation
The price decomposes into an unusually long bet. At $682.13 (July 10, 2026), the premium embedded in the price loads onto assumptions of operating growth held near the self-funding ceiling for roughly 29 years, and, notably, the decomposition locates that stretch on the Transportation Solutions side of the business rather than the celebrated data-center segment. That read carries moderate confidence (the segment is small enough that the solve is sensitive to assumptions), but the direction is unambiguous: only about 14 percent of comparable fast-growers sustained such a pace for even ten years. The priced-in assumption is elevated, above what the demonstrated fundamentals comfortably support.
The method families split the way they always split on a company mid-ramp. Only the cash-flow lens reaches the price, and its base case does so by holding today's roughly 37x EV/EBITDA flat for seven years, against a sector median of 12x. Peer multiples read the price about 76 percent above what they defend, with the blend sitting at 31x earnings against a 61x trailing multiple and an 18x sector median. The earnings-power and book-return frames land at three to five times below the price, and the honest bridge is that both capitalize history: a five-year average of operating income reflects the company Sterling used to be, before first-quarter 2026 revenue grew 92 percent to $825.7 million. On management's raised full-year guidance of $18.40 to $19.05 in adjusted EPS (a company-defined non-GAAP figure), the price is about 36x the midpoint, which is where the real debate lives: that is a premium software-style multiple on a construction firm, defensible only while backlog compounds.
The concrete what-has-to-be-true is visible in the backlog math. The 10-K put backlog at $3.01 billion at year-end 2025 with contracts typically completed in 6 to 36 months; by the first quarter, signed backlog reached $3.8 billion and combined backlog $5.15 billion. The price effectively assumes that pool keeps refilling faster than it burns for years. Solvency is not the constraint: $512 million of liquid assets against $288 million of gross debt leaves a net cash position, the company generates rather than consumes cash, and dilution has been modest at about 0.8 percent a year. The downside is not balance-sheet stress; it is the multiple's sensitivity to the first quarter in which the data-center order flow merely flattens.
Catalysts
The second-quarter report, due in early August on the company's usual cadence, is the next reading on the only variables that matter at this multiple: backlog and guidance. The first quarter set a demanding baseline, revenue up 92 percent to $825.7 million, diluted EPS up 141 percent to $3.09, adjusted EBITDA up 107 percent to $166.6 million, and full-year guidance raised to $3.7 to $3.8 billion of revenue with adjusted EPS of $18.40 to $19.05. A second consecutive guidance raise would confirm the ramp; a hold would be read as deceleration.
Backlog composition is the leading indicator inside the print. E-Infrastructure signed backlog rose 123 percent year over year in the first quarter (74 percent excluding CEC), mission-critical projects (data centers, manufacturing, semiconductor facilities) exceeded 90 percent of that backlog, and management sized the total addressable pool of signed work, unsigned awards, and future phases near $6.5 billion, up roughly $2 billion since year-end. The CEC electrical-services acquisition adds a second dimension to watch: its earnout is contingent on operating income targets, so its contribution and margin trajectory get their first full-quarter reads through 2026.
The macro channels that could move the stock independent of execution are hyperscaler capex commentary (the customers' capital plans are the demand curve), power-availability constraints on new data-center starts, and Texas residential conditions for the Building Solutions segment. Sell-side fair-value estimates have been ratcheting upward alongside the backlog, with analysts revising 2026 outlooks after each print; the flow of those revisions, more than their level, has been the stock's fuel.
Peer Cohorts (Per Segment, With Filing Citations)
E-Infrastructure Solutions (reported)
- IESC (IES Holdings, Inc.)
- (no filing in the citation store)
- MTZ (MasTec, Inc.)
- (no filing in the citation store)
- PWR (Quanta Services, Inc.)
- (no filing in the citation store)
- EME (EMCOR Group, Inc.)
- (no filing in the citation store)
- PRIM (Primoris Services Corporation)
- (no filing in the citation store)
- FIX (COMFORT SYSTEMS USA, INC.)
- (no filing in the citation store)
Transportation Solutions (reported)
- ROAD (Construction Partners, Inc.)
- (no filing in the citation store)
- GVA (GRANITE CONSTRUCTION INC)
- (no filing in the citation store)
- PRIM (Primoris Services Corporation)
- (no filing in the citation store)
- MTZ (MasTec, Inc.)
- (no filing in the citation store)
- FLR (FLUOR CORPORATION)
- (no filing in the citation store)
- ACM (AECOM)
- (no filing in the citation store)
Building Solutions (reported)
- IBP (Installed Building Products, Inc.)
- (no filing in the citation store)
- BLD (TopBuild Corp)
- (no filing in the citation store)
- MYRG (MYR GROUP INC.)
- (no filing in the citation store)
- DY (DYCOM INDUSTRIES, INC.)
- (no filing in the citation store)
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.
Sources
company Q1 2026 release · company Q1 2026 earnings release, May 2026 · same release · company Q1 2026 earnings release · company Q1 2026 release and presentation · Simply Wall St analyst-revision coverage, June 2026